Reported / Citable
Background
Daniel Mallo Malubag, an honorably discharged Army veteran, applied for Social Security Disability Insurance (SSDI) on July 17, 2023, claiming disability from April 30, 2023, due to posttraumatic stress disorder, major depressive disorder, obstructive sleep apnea, migraine headaches, carpal tunnel syndrome, and other conditions. The Social Security Administration initially denied his claim and denied reconsideration.
An Administrative Law Judge held a telephone hearing on June 20, 2024, and announced plans to review additional military service records and hold a supplemental hearing. However, no supplemental hearing occurred. The ALJ issued an unfavorable decision, finding at step two of the five-step sequential evaluation that none of Malubag’s impairments were “severe,” thus terminating the analysis and denying disability benefits. The Appeals Council denied review, and Malubag filed suit.
The Court’s Holding
The magistrate judge recommended remand because the ALJ applied an incorrect legal standard when determining whether Malubag’s impairments reached the “severe” threshold required to proceed past step two of the Social Security analysis. Although the ALJ cited the proper legal standard in the opinion’s legal section, he consistently applied the Social Security Administration’s regulatory “significantly limits” standard throughout his analysis—repeating this language at least seven times—rather than the correct Fifth Circuit standard requiring only a “slight abnormality” with “minimal effect” on ability to work.
The court emphasized that citing the correct standard is insufficient; what matters is its actual application. The ALJ’s systematic reliance on the regulatory standard, culminating in a final conclusion explicitly grounded in that standard, demonstrated error. The court noted that Malubag needed only a de minimis showing to establish severe impairment and proceed past step two, making the choice of standard material to the outcome.
Because the ALJ did not proceed beyond step two, the court could not determine whether any error was harmless. Therefore, the case required remand for reconsideration using the correct Fifth Circuit “minimal effects” standard consistent with Social Security Ruling 85-28.
Key Takeaways
- ALJs in the Fifth Circuit must apply the Fifth Circuit’s “slight abnormality”/”minimal effect” standard for severity, not the SSA regulation’s “significantly limits” standard, despite the regulatory language.
- Citing the correct legal standard is not sufficient; ALJs must actually apply it throughout the decision, not selectively in different sections.
- Step-two severity determinations that terminate the analysis before vocational factors are considered require remand when an incorrect legal standard was applied.
- Claimants need only make a de minimis showing to clear step two and reach full disability analysis, making the standard choice dispositive.
Why It Matters
This decision highlights a critical tension in Social Security disability law within the Fifth Circuit: ALJs must apply a more lenient severity standard than the written SSA regulations prescribe. The Fifth Circuit’s “slight abnormality” test, established in Stone v. Heckler (1985), provides greater protection to disability claimants than the regulatory “significantly limits” language, yet many ALJs continue to apply the regulatory standard. This case clarifies that boilerplate citation of the correct standard does not cure substantive legal error in its application and will result in remand.
For disability claimants and practitioners, the decision underscores the importance of challenging step-two determinations in the Fifth Circuit when ALJs use the regulatory language, since that linguistic choice signals improper application of the legal standard. The minimal threshold for severity—merely showing minimal rather than significant effects on ability to work—significantly expands the pool of claimants entitled to full vocational analysis of their disability claims.